The British pound is trading around 1.3447 within a small secondary uptrend channel and is pulling back after encountering strong resistance near the upper band of the main channel and around the 5/8 Murray level.

If the British pound decisively breaks below the secondary uptrend channel in the coming hours and consolidates below the 21-period simple moving average (SMA) at 1.3450, this will be considered a signal to open short positions. We expect GBP/USD to reach the Murray 4/8 line around 1.3427 and, ultimately, the 200-period simple moving average (SMA) around 1.3366.

Conversely, if the British pound rebounds above the 21-period simple moving average (SMA) and remains within the uptrend channel, this will be considered an opportunity to buy above 1.3450 with targets at 1.3488; ultimately, we expect GBP/USD to reach the upper band of the channel at 1.3528.

Since US government employment data is released on the first Friday of each month, the British pound could come under strong downward pressure if the NFPs are negative; hence, GBP/USD could plunge to 1.3366.

We should keep an eye on the 1.3427 area. A technical bounce above this level could be seen as an opportunity to continue buying in the coming days, whereas a drop below the 4/8 Murray line could change the outlook for the British pound—we could expect it to reach the 200 EMA around 1. 3360, and finally, we expect GBP/USD to fall to the lower band of the uptrend channel around 1.3300.